London, ON: "Correcting a common behavioural trap with RRSPs is a can't-lose way to boost your retirement funds by 25-85%," says Talbot Stevens, a financial speaker and author of the upcoming book 'Smart Debt'.

RRSPs, of course, are fully taxable when withdrawn, and are before-tax dollars. But money that is available to spend or save has generally already been taxed, and is after-tax dollars. Knowing the difference, and investing the full amount intended, can make a huge difference.

Consider Sue, who is in a 40% tax bracket and has $3,000 to save for retirement.

If Sue puts the $3,000 in her RRSP, and spends the refund -- as most do -- she will have added $3,000 to her retirement fund, as she expects. But they are now before-tax dollars. Sue has been a victim of a common behavioural trap with RRSPs, and has unknowingly and unintentionally converted her $3,000 of after-tax retirement savings into $3,000 of before-tax retirement savings, which is worth much less.

Since she started with $3,000 of after-tax money, and her intention was to use the savings to fund her retirement, Sue needs to invest the full, equivalent amount in her RRSP, which in this case is $5,000.

It is easy to see that $5,000 in an RRSP is worth only $3,000 after paying 40% in taxes. But how does Sue get the equivalent before-tax amount in her RRSP?

"By using the only can't-lose RRSP loan strategy," say Stevens.

"By temporarily borrowing $2,000, Sue can 'gross up' her $3,000 to a $5,000 RRSP contribution," he explains. "After filing income taxes, Sue will quickly get back a refund for 40% of the $5,000 contributed, or $2,000. This short-term gross-up loan is completely, and almost immediately, paid off with the refund.

An RRSP gross-up loan strategy is one of the few "can't-lose" good debt strategies, even if you are a conservative GIC investor. In Sue's case, the approach puts $5,000 in her RRSP instead of $3,000, an increase of 67%."

While most only think about short-term RRSP top-up loans or larger catch-up loans, if you want a simple, no-risk strategy to boost your retirement savings, make sure you use a temporary loan to "gross up" your RRSP contribution to the equivalent before-tax amount.

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Talbot Stevens is a financial speaker and author of the upcoming book "Smart Debt: 7 Secrets of the Rich to Increase Your Wealth and Security". For more information, contact Talbot Stevens, by calling (519) 663-2252, or emailing talbot@TalbotStevens.com.